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Daily Market Update August 12, 2020

Early Morning Update

The Sep20 natural gas contract is trading down $0.03 at $2.14.  The Sep20 crude oil contract is up $0.79 at $42.40.

Summary

The NYMEX natural gas prompt month contract gained $0.018/MMBtu yesterday, opening the day at $2.153/MMBtu and closing at $2.171/MMBtu. However, longer-term NYMEX contracts starting in April 2025 sold off $0.085/MMBtu of their prior day value, an interesting move. Overall, the moves continue to support the thought that near to medium-term demand may outpace supply, which has taken a hit due to an increased focus on capital discipline by E&P’s. Natural gas production is averaging 87.6 Bcf/day so far this month, a 4.8 Bcf/day drop vs. this time last year. All the while, demand remains relatively resilient, given the circumstances of the pandemic. Year-to-date demand is averaging 81.4 Bcf/day, down 2.1 Bcf/day vs. last year. The number one sector buoying year-to-date demand continues to be power burn, which is averaging 1.8 Bcf/day higher than last year. Looking ahead, tomorrow’s storage report from the U.S. Energy Information administration is expected to report an injection that is less than the 5-year average.

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